1
Q
Customer specific suitability for new account form that you must make a reasonable effort to obtain (ATLITIRFO)
A
A- age
T- tax status (don’t need tax return)
L- liquidity needs
I- investment objectives and goals
T- time horizon
I- investment experience and product knowledge
R- risk tolerance
F- financial situation
O- other investments
2
Q
Investment goals examples
A
Saving for a home
Saving for education
Saving for retirement
Living in retirement
Investing a windfall
3
Q
Deferred annuities save for future ____
A
Retirement
4
Q
For new account info, financial situation information includes that of
A
Income
Disposable income
Special expenses
Cash flow
Net worth
5
Q
Preservation of capital wants ____ of original investment amount
A
Safety
6
Q
Capital appreciation wants ____
A
Growth
7
Q
Credit risk, AKA, ____ risk, is the risk that the issuer cannot make interest and principal payments
A
Default
8
Q
Variable rate bonds do not have _____ risk
A
Interest rate
9
Q
The receiving firm will review the assets from an ACAT to determine whether it wishes to accept the transfer. It will have ___ additional days to complete the transfer of assets.
A
3
10
Q
An executor of a customer’s estate will typically transfer the assets in the account to an estate account but will need which legal docs
A
Letters testamatory
Inheritance tax waivers
Copy of certificate of death or affidavit of domicile
11
Q
If a stock is moving within a narrow range with no major upward or downward movement; it is moving sideways and is said to be ________
A
Consolidating
12
Q
Price breaks through resistance level, it is _____
A
Bullish
13
Q
If a stock breaks through the support level, it is ____
A
Bearish
14
Q
Technical analysts rely on ____ and chart measures
A
volume
15
Q
Technical analysts evaluate ____ trends
A
market
16
Q
Fundamental analysis uses 3 main statements
A
Income statement
Balance sheet
Cash flow statement
17
Q
Fundamental analysis factors ____ per _____
A
Earnings, share
18
Q
Fundamental analysis also factors working ____ and measures _____
A
Capital, liquidity
19
Q
Net working capital, quick ratio, liquidity are all ______ analysis
A
Fundamental
20
Q
P/E ratio, quick ratio, acid test, current ratio, net working capital, cash flow, book value, inventory are all _______ analysis
A
Fundamental
21
Q
________ is the process in which minimum and maximum limits are set for each asset class’ portfolio proportion
A
Tactical asset allocation
22
Q
_________ is based on the belief that fundamental analysis performed by an analyst can identify undervalued securities and produce a superior return within a given asset class
A
Active asset management
23
Q
_________ is based on the belief that the market is efficient in pricing securities
A
Passive asset management
24
Q
P/E ratio
A
Share price/ earnings per share
25
REIT’s ordinary dividends are taxed at ____ and qualified dividends are taxed at
Ordinary tax rate, long term cap gains rate
26
In DPP’s, what establish the basis: contributing ___ to the partnership, contributing _____, assuming _____ debt
Cash, property, recourse
27
In DPP’s, what increases the basis:
Additional contributions
28
In DPP’s, what decreases the basis:
Distributions and repayment
29
When someone dies and you inherit the assets, you are not subject to estate taxes but get a ____ in cost basis no matter what the deceased person paid in the securities
Step up
30
Wash sales also apply to ____ accounts and any corporate account that a taxpayer controls
Spousal
31
When it comes to situations similar to wash sales, if the security is somewhat different, the loss is ____ and counted as a loss for that year
Allowed
32
What are the 3 main determinants of a wash sale?
Issuer
interest rate
maturity date
33
Variable annuities are _____ investment companies but they use them to offer investment options to their customers
Not
34
Muni funds provide ___ income
Tax free
35
Us Gov securities funds provide ____
Safety
36
Corp bond funds provide higher rates of _____
Interest
37
Blue chip stocks and funds are considered to be both ____ and ___
Growth and income
38
Expense ratio
Total expenses/ average net assets
39
ETF’s are traded throughout the day like ___
CEF’s
40
ETF’s are tax efficient because they don’t distribute ____
capital gains
41
ETF’s should be bought by ___ investors because they need to be able to absorb the losses
Speculative
42
ETF’s are for ____ term investors
Long
43
ELN’s are ___ debt that pay at ____ and are based on the return of a single stock, basket of stocks, or an equity index
Unsecured, maturity
44
ETN’s are considered to be ___ like and are a loan that is backed by a credit rating of a bank _____
Bond, loan
45
Principal protected notes are zero coupon bonds that track an index and pay at ___
Maturity
46
Principal protected notes are _____ debt
Unsecured
47
To set up a partnership as a legal entity, you need a ____
certificate of limited partnership
48
Repayment order in liquidation
Secured
Unsecured
General creditor
Debenture
Preferred
Common
49
Revenue bonds are missed to fund a _____
Project
50
Industrial development bonds are issued by a city, states or local agency to build an ____ that is to be leased to a private company
Industrial facility
51
Variable rate securities can carry ___ risk
Interest rate
52
Commercial paper is ___ term and backed by a line of ___
Short, credit
53
Jumbo CD’s can be credited up to
100,000
54
Preferred stock cannot ___ and does not have _____
Vote, preemptive rights
55
Cumulative preferred stoxk pays all the ____ payments and must be paid before the issuer can resume making any other dividend payments
Missed
56
Adjustable rate preferred stock is good for preservation of ____ because it’s based on a benchmark rate
Capital
57
Callable preferred means you can call after ____
A set date
58
Convertible preferred stocks can convert based on a ___ price
Predetermined
59
Price of convertible preferred is typically driven by the price of the issuer’s _____
Common shares
60
Revocable trust can be ____ at any time prior to death by the person who owns the assets
Revoked
61
Living trusts have assets put in when person is living but testamatary is initiated upon ___
Death
62
ADR’s are subject to ___ risk or ___ risk
Currency, exchange rate
63
Even with ______, a rep still CANNOT sign docs for a customer
power of attorney
64
For diminished mental capacity- employees should identify it and ____ it immediately
Escalate
65
When a firm knows someone has finished mental capacity, they are to ____ trading until the concern is _____. You can also reach out to their trusted contact person about this situation
Suspend, resolved
66
If a member suspects financial exploitation, they are to report it to the appropriate person within the firm and can also discuss it with the ____
Customer
67
A ____ occurs when a subsidiary or division of a parent corp becomes an independent company and the new company’s shares are distributed to existing shareholders of the parent company on a pro-data basis
Spin off
68
In a spin off, the parent company does not receive ____, as the shares serve as compensation
Cash
69
Intrastate offerings mean that ___% of issuers revenues must come from within the state and ____% must be sold to the residents of that state
80, 100
70
TIPS Pay ____ interest how often?
Fixed, semi annually
71
TIPS can be held until maturity, or they can be sold before maturity on the ___ market
Secondary
72
TIPS stand for
Treasury Inflation Protection Securities
73
Day orders are only good until the end of the ____, at which point they are canceled or not filled.
Trading day
74
GTC orders remain open until it is completely ____, you ____ the order, or until a certain time period that’s determined has _____
Filled, cancel, passed
75
Fill or Kill
All or None
Immediate or Cancel
FOK- all immediately or cancelled
AON- all of it (like FOK), or not executed, but is open til it’s filled
IOC- must be filled immediately and can be filled all the way or partially
76
Intrinsic value is the difference between _______
Strike prices
77
A ban of donations to a candidate can happen when it has an _____ and is _____
Influence, local
78
ETF’s are a ____ of securities basket
79
ETF’s have a low expense ratio, and _____ efficiency but are more _____
Tax, speculative
80
529 funds grow _____ and are ____ when used for qualified education expenses
Tax deferred, tax free
81
Non qualified 529 tax withdrawals have a ___% penalty
10
82
Tax consequence is also known as ____
Cost basis
83
Deposit amount is the difference between the ____ when it is at a loss
Premiums
84
1933 act is for ____ issues
Primary
85
1934 act is for ____ issues
Secondary
86
Aggressive allocation also can be
Cash- 0-10%
Equity- 80-90%
Fixed income- 10-20%
87
Moderate allocation can be
Cash- 10-15%
Equity- 70-80%
Fixed income- 20-25%
88
Conservative allocation can be
Cash- 20-30%
Equity- 30-40%
Fixed income- 50-60%
89
SEC does not approve securities but _____ them
Registers
90
Exempt transactions include
Small offerings (Reg A)
Corporate reports (Rule 145)
Private Placements (Reg D)
rule 144 transactions (ones that require the use of a prospectus)
Rule 144A- tradable private placements
Reg S
91
Are social security cards acceptable for USA Patriot Act?
No
92
Numbered accounts allow you to be ____
Anonymous
93
What is permitted during the cool off period?
Red Herring (preliminary prospectus)
Collections of Indication of Interest
Tombstone ad
Road shows
Free writing prospectus
94
3 phases of taking a company public per SEC Act of 1933
Pre Registration (Pre File)
Cooling off Period
Post Effective Period
95
Permitted and Prohibited during cooling off period
Permitted
Collection of interest
Publication of tombstone ads
Road shows
Free writing prospectus
Prelim prospectus
Prohibited
Sales
Orders
Money changing hands
96
Reg BI imposes 4 obligations
Disclosure obligation
Care obligation
Conflict of interest obligation
Compliance obligation
97
Form CRS must maintain
Relationship and services
Fees and costs
Conflicts of interest
Standard of conduct
Disciplinary history of the firm and its professionals
How a customer can obtain additional info on the firm
98
BD’s must deliver form CRS to each retail investor before or at the earliest of
A reccomendafion of an account type
A securities transaction or an investment strategy involving securities
Placing an order for a retail investor
The opening of a brokerage account for a retail investor
99
Form CRS has to be filed through _____
FINRA GATEWAY
100
any changes to form CRS must be sent to existing customers within ___ days
60
101
A current form CRS must be provided to any customer upon request and posted on the ____
BD Website
102
Customers must be sent written confirmation of each transaction ___ or ___ settlement
At, before
103
All trade cancellations or adjustments must be approved by ____
The principal
104
If a client gives the wrong instructions, the trade must be ____
Accepted
105
If a trade was incorrectly executed, the original trade will be canceled and rebilled in the _____
Correct amount
106
Transfer and held securities must be registered in the ______ name but held for safekeeping by the _____
Customer’s, brokerage firm
107
Direct registration securities are registered in the ____ own name without a physical certificate
Purchaser’s
108
If a registered rep leaves the firm, the accounts are property of _____
The BD
109
If a rep inherits an account of a rep who left for another firm, the ____ must be updated before making any transactions in the account
Account documents
110
Proxy statements are sent for upcoming votes such as
The election of people to the board of directors
Election or ratification of the company’s accountant
Authorization of new securities issues
The modification or exchange of securities
Any other submitted shareholder resolutions
111
A trusted contact person can be used to
Disclose info about the clients account if exploitation is expected
Confirm specifics of the clients current contact info or health status
Obtain the identity of any legal guardian, executor, trustee, or holder of POA
112
Customers who were solicited to move accounts must receive an educational brochure within ___ days
3
113
Efficient use of assets can be measured with
Inventory, turnover ratio, cash flow
114
Loosening credit is a ___ stance
Dovish
115
Tightening credit is a ___ approach
Hawkish
116
Most agency securities are quoted on a ____ spread basis
Yield
117
Muni’s are quoted on a ____ day basis
30/360
118
Secured bonds, convertible bonds, and unsecured bonds, are considered to be _____ debt
Corporate
119
Unsecured debt includes
Commercial paper
Debentures
Guaranteed bonds
Income bonds
120
Secured bonds include
Mortgage bonds
Equipment trust certificates
121
When the bond trades ABOVE parity, there’s no need for _____ into stock
Conversion
122
When a bond trades BELOW parity, it becomes profitable to ____
Convert
123
Arbitrage only works when the bond trades _______ parity
Below
124
Conversion of bonds does not create __ liability and is a benefit to both the corporation and the investor
Tax
125
When a convertible bond is called the bond holder can avoid REDEMPTION by _____ instead. This is called _____
Converting. Forced conversion
126
What factors would be in mind for best trade execution?
Price, volatility, liquidity
Size and type of transaction
Number of markets checked
Location and accessibility of the customer’s BD to primary markets and location services
127
___ is when a trader tries to manipulate the market by placing large orders that try to convince others that a big buyer or seller has entered the market
Spoofing
128
STRIPS were designed for ___ term investments
Long
129
STRIPS are long term zero coupon bonds (deep discount) and is highly susceptible to _____ risk
Interest rate
130
STRIPS are usually held to _____
Maturity
131
STRIPS avoid ____ risk because they do not have interest payments- similar to zero coupon bonds. No ___ is paid
Reinvestment, coupon
132
TIPS avoid _____ risk
Purchasing power
133
TIPS have a ___ rate over the life of the bond and the principal amount is adjusted every ____ months by an amount equal to the change in the CPI
Fixed, 6
134
The bond holder of TIPS will receive a higher return at maturity if the principal amount is adjusted _____ due to inflation
Upwards
135
TIPS have a ____ interest rate than treasury issues with a similar maturity
Lower
136
Treasury bonds and notes pay interest ___
Semiannually
137
Treasury securities have ____,____,_____,_____,____ week maturities (5)
4, 8, 13, 26, 52
S7
flashcards
Decks in class (32)
# Cards
-
Tranches9
-
Retirement3
-
Options33
-
Practice Test 267
-
Practice Test 160
-
Practice Test 372
-
Practice Test 459
-
Practice Test 562
-
Practice Test 639
-
Practice Test 749
-
Practice Test 856
-
Practice Test 948
-
Practice Test 1071
-
Practice Math Problems65
-
Practice Suitability Questions21
-
Product Suitability Summaries59
-
Product Suitability 242
-
Refining150
-
Bounce Back 2.0137
-
Bounce Back 3.0180
-
Bounce Back 4.0362
-
Lists55
-
Redemption142
-
Redemption 2119
-
Redemption 3119
-
Redemption 472
-
Redemption 5118
-
Redemption 6186
-
Redemption 790
-
Redemption 880
-
Redemption 995
-
Redemption 10137
